Correlation Between NewAmsterdam Pharma and Erasca

Can any of the company-specific risk be diversified away by investing in both NewAmsterdam Pharma and Erasca at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NewAmsterdam Pharma and Erasca into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NewAmsterdam Pharma and Erasca Inc, you can compare the effects of market volatilities on NewAmsterdam Pharma and Erasca and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NewAmsterdam Pharma with a short position of Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewAmsterdam Pharma and Erasca.

Diversification Opportunities for NewAmsterdam Pharma and Erasca

0.17

Correlation Coefficient

NewAmsterdam Pharma  Erasca

Average diversification

The 3 months correlation between NewAmsterdam and Erasca is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NewAmsterdam Pharma and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc and NewAmsterdam Pharma is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NewAmsterdam Pharma are associated (or correlated) with Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of NewAmsterdam Pharma i.e., NewAmsterdam Pharma and Erasca go up and down completely randomly.

Pair Corralation between NewAmsterdam Pharma and Erasca

Given the investment horizon of 90 days NewAmsterdam Pharma is expected to generate 0.87 times more return on investment than Erasca. However, NewAmsterdam Pharma is 1.15 times less risky than Erasca. It trades about 0.11 of its potential returns per unit of risk. Erasca Inc is currently generating about 0.08 per unit of risk. If you would invest  1,591  in NewAmsterdam Pharma on September 3, 2024 and sell it today you would earn a total of  373.00  from holding NewAmsterdam Pharma or generate 23.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NewAmsterdam Pharma  vs.  Erasca Inc

NewAmsterdam Pharma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NewAmsterdam Pharma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, NewAmsterdam Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Erasca Inc

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Erasca Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Erasca unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NewAmsterdam Pharma and Erasca

The main advantage of trading using opposite NewAmsterdam Pharma and Erasca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewAmsterdam Pharma position performs unexpectedly, Erasca can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Erasca will offset losses from the drop in Erasca's long position.

The idea behind NewAmsterdam Pharma and Erasca Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.